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[2014] ZAGPJHC 296
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M v M (2014/3044A) [2014] ZAGPJHC 296 (29 October 2014)
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REPUBLIC
OF SOUTH AFRICA
SOUTH GAUTENG HIGH COURT, JOHANNESBURG
Case
no: 2014/3044A
DATE:
29 OCTOBER 2014
In the matter between:
[M………..],
S………….
Appellant
And
[M……......],
E………
Respondent
JUDGMENT
Headnote
Divorce- division of joint estate – forfeiture of benefits
Divorce Act 70 of 1979
–
SS 7
,
9
– interpretation
S 7(8)
(a) (i) – meaning – empowers court to make order against
pension fund despite it not being a party to the litigation
–
not an independent source of power to effect a forfeiture- various
circumstances where a
S7(8)
(a) (i) order is appropriate set out
S 9
is only source of power to order forfeiture – whereas
S7(3)
empowers a court to transfer assets from one estate to another –
limited criteria to be used to determine a justification
for a
forfeiture Dictum in JW v SW 201(1) SA 545 (GNP) considered and
distinguished – correctness of remarks about absence
of
fairness in
S9
orders questioned Pension interest of one spouse –
what bases can exist for other spouse to obtain a transfer of such
interest
SUTHERLAND J:
[1]
The
respondent, E….. M……. sued her husband, S……
M…….. for divorce. The matter was
heard before the
Regional Magistrate, Johannesburg. The litigants were in agreement to
dissolve their marriage. In a pre-trial
agreement it was stipulated
that there was only one issue in contention; i.e. “whether the
plaintiff /respondent is entitled
to 50% of the pension interest of
the defendant/appellant [who] has pleaded forfeiture of same”.
[2]
The
court ordered the joint estate, which was in community of property,
to be divided and further ordered that: “25% of the
defendants’
pension interest …. be paid to the plaintiff”.
[3]
The
appeal is against the order relating to the pension interest. The
effect of the order is that the respondent forfeited half
of her
interest (by reason of the joint estate) in her husband’s
pension interest. The appellant wants a total forfeiture.
[4]
The
magistrates reasons are muddled and it is plain that he was confused
about the proper meaning of the provisions of
sections 7(7)
,
7
(8)(a)(i) and
9
of the
Divorce Act 70 of 1979
.
[5]
The
provisions read:
“
Section
7:
Division of assets and maintenance of parties
(
1)
….(6)
(7) (a) In the determination of
the patrimonial benefits to which the parties to any divorce action
may be entitled, the pension
interest of a party shall, subject to
paragraphs (b) and (c), be deemed to be part of his assets.
(b) The
amount so deemed to be part of a party's assets, shall be reduced by
any amount of his pension interest which, by virtue
of paragraph (a),
in a previous divorce-
(i) was paid
over or awarded to another party; or
(ii) for the
purposes of an agreement contemplated in subsection (1), was
accounted in favour of another party.
(c) Paragraph
(a) shall not apply to a divorce action in respect of a marriage out
of community of property entered into on or after
1 November 1984 in
terms of an antenuptial contract by which community of property,
community of profit and loss and the accrual
system are excluded.
(8)
Notwithstanding the provisions of any other law or of the rules of
any pension fund-
(a) the
court granting a decree of divorce in respect of a member of such a
fund, may make an order that-
(i) any part
of the pension interest of that member which, by virtue of
subsection (7), is due or assigned to the other party
to the
divorce action concerned, shall be paid by that fund to that other
party when any pension benefits accrue in respect of
that member;
(ii) ….
(b) ….
(emphasis supplied)
Section 9:
Forfeiture of
patrimonial benefits of marriage
(1)When a decree of divorce is
granted on the ground of the irretrievable break-down of a marriage
the court may make an order that
the patrimonial benefits of the
marriage be forfeited by one party in favour of the other, either
wholly or in part, if the court,
having regard to the duration of the
marriage, the circumstances which gave rise to the break-down thereof
and any substantial
misconduct on the part of either of the parties,
is satisfied that, if the order for forfeiture is not made, the one
party will
in relation to the other be unduly benefited.
(2)In the case of a decree of
divorce granted on the ground of the mental illness or continuous
unconsciousness of the defendant,
no order for the forfeiture of any
patrimonial benefits of the marriage shall be made against the
defendant.”
[6]
The
only witnesses were the two litigants. The appellant testified that
the respondent left the common home for a reason of which
he is
unaware. He said the only point of dispute was that he believed that
her half share in his pension interest should be forfeited
because
she had liquidated her pension benefits in 2008 and allegedly not
shared the benefits with him. The respondent’s
evidence was
that she was expelled from the bedroom and later, to escape assault
and abuse by him left the home. She testified
that she resigned
from her job in 2008 and her pension benefits were paid to her. She
said she used the funds to pay for the education
of the children. The
appellant said he too paid a portion of the costs of education. She
said her motive to resign was to get the
funds from her pension fund
to finance the children’s private education. The appellant
denied this. There was a debate in
evidence about inadequate
disclosure of information about how she had deployed the funds
received. That was the essence of the
body of material evidence
presented.
[7]
The
magistrate embarked on an enquiry to determine if forfeiture by the
respondent, as contemplated by
section 9
, was justified. The elements
for consideration in that section are threefold: (1) What is the
duration of the marriage? (2) Why
did it break down? (3) Did either
spouse commit substantial misconduct? The enquiry requires an
assessment, in the light of these
factors, about whether an ‘undue
benefit’ will accrue to one spouse if forfeiture is not made.
In
Wijker
v Wijker
1993 (4) SA 720
(AD) at 727 E -
F
it was held that the question of whether there is a benefit is a
question of fact and the question of whether the benefit was
undue is
a value judgment. Moreover, these three factors need not all be
present in order to establish that a benefit is undue;
however only
these factors and no others must be weighed. (See:
Botha
v Botha
[2006] ZASCA 6
;
2006 (4) SA 144
(SCA)
[8]
The
marriage was 25 years long. Self-evidently, it was a long marriage.
However the spouses ceased to share their personal lives
from 2008.
Their relationship de facto lasted about 19 years. No
substantive comment is made about this factor by the magistrate.
As
to the cause of the breakdown the magistrate stated he could make no
finding for want of evidence to support either version.
This
circumstance is the outcome of the manner of presentation of the
case; i.e. both parties wanted a divorce and the accusations
of the
one against the other were therefor not canvassed with a view to a
definitive factual finding. Lastly, the magistrate concluded
that he
could make no finding about substantial misconduct either, for
similar reasons.
[9]
In
the result, the magistrate held that no case for forfeiture had been
proven. On the basis of what evidence was before the magistrate
this
is a finding that cannot be criticised. Moreover, the sole basis
advanced by the appellant to justify a forfeiture was, in
any event
objectively, misdirected. The primary contention for a forfeiture was
the idea that the respondent, upon resigning from
her long term job,
liquidated her pension fund benefits and did not ‘share’
the proceeds with the appellant. The very
notion of the appellant not
sharing in these benefits is problematic. The money received by the
respondent from her pension fund
went
ex
lege
into the joint estate. (See:
Government
Employes Pension Fund v Naidoo & Another 2006(6) SA
304 (SCA)
)The
appellant had a half share in such moneys during the course of the
marriage. There were no ‘benefits’ in existence
at the
time of the divorce to take into account. (See:
Eskom
Pension and Provident Fund v Krugel & Another
2012 (6) SA
143
(SCA)
)
Moreover, to a large extent it was common cause that some, if not
all, of the funds paid out to the respondent were used on the
affairs
of the joint estate and the family. Whatever was left over, if
anything, fell into the basket of assets the parties had
agreed to
divide equally.
[10]
That
should have been the end of the case. However an astonishing further
enquiry was embarked upon.
[11]
The
magistrate thought that
section 7(8)(a)(i)
vested him with a distinct
discretionary power to grant what was, in effect, another form of
forfeiture. Relying on the finding
that the respondent had tried in
her testimony to conceal assets which she de facto controlled, he
ordered that she get only 25
% of the appellant’s pension
interest instead of 50 %. Manifestly, such conduct by the respondent,
deplorable though it may
be, is not relevant to the marriage
relationship per se. It seems that the magistrate might have
approached this mendacity on the
premise that it was ‘substantial
misconduct’. If this is so, it was in error because the
‘substantial misconduct’
contemplated in
section 9
is
confined to conduct relevant to the marriage relationship (although
not necessarily a cause of the break-down) not conduct about
how the
case was presented in a court, which could only have been relevant to
a costs order. Ironically, he made no costs
order. The order
made that the respondent ‘forfeit’ half of her share in
the appellant’s pension interest was
therefore doubly wrong; ie
a finding had already been made that a case for forfeiture was not
proven and moreover the respondents
conduct in court was a non
sequitur as regards the issue of either forfeiture or the division of
the estate.
[12]
Section
7(8)
must be read with
section 7(7).
Section 7(7)(a)
provides that
the contingent ‘pension interest’ that a member of a
pension fund has in the future benefits from a pension
is to be
classed as an asset in that person’s estate for the purposes of
a division of assets on divorce. It follows that
if that person is
married in community of property the pension fund interest is an
asset in the joint estate of which that person
and the non-member
spouse each has a undivided half share.
Section 7(7)(c
) expressly
excludes a marriage out of community of property from the
application of that provision. Accordingly,
ex
lege
,
the respondent had a undivided half share in the pension interest of
the appellant. This was the also clear understanding
of the
parties and frankly acknowledged by both.
[13]
Accordingly,
that ‘pension interest’ is part of the bundle of assets
to be divided up between the divorcing spouses.
Of course, the
‘pension interest’ is simply a value calculated as at the
date of divorce. It is that ‘value’
which falls
into the reckoning of the total value of the basket of assets along
with all of the other assets in the joint estate.
(See:
Maharaj
v Maharaj
2002 (2) SA 648
(D) at 651E.
)
The value of the half share in the joint estate is then known. The
assets are then apportioned. If there is a dispute of fact
about what
comprises all the assets, the remedy is to appoint a receiver to
unearth the assets, value them and divide them.
[14]
The
function of
section 7(8)(a)(i)
is to enable a court to give effect to
a division of the joint estate by ordering a Pension fund to
recognise that division and
pay or appropriate a portion for the
non-member spouse. This is an extraordinary power given to a court to
make an order binding
on a person who is not a party to the
proceedings; ie the pension fund. The provisions of the section mean
that if the spouses
are married in community of property that the
share of the non-member in the member’s pension interest,
alluded to in
section 7(7)
, as being the ‘..part of the pension
interest … due ….to the other party ….’
may be subject to
an order against the pension fund (see:
Old
Mutual Life Assurance Co (SA) Ltd & another v
Swemmer
2014 (5) SA 373
(SCA) at [17] – [20] and [22]
.)
[15]
When
it is necessary to make an order in terms of
section 7(8)(a)(i)?
[16]
First,
to assume a simple division of a joint estate, if the value of a half
share of the joint estate is larger than a pension
fund member’s
pension interest, then a division can take place without disturbing
the members pension interest, because the
pension interest will
remain wholly within that spouse’s half share. No order in
terms of
section 7(8)(a)(i)
is necessary.
[17]
Second,
if the value of a half share of the joint estate is less than a
pension fund member’s pension interest then, logically,
some of
that pension interest will have to be ‘appropriated’ to
the non-member’s post –divorce estate.
In such a case, a
part of the pension interest can be ordered to be paid to the
non-member spouse. The parties could agree to precisely
such an order
in the agreed value to make up the equal shares. (In this case, on
the defendant’s claim for an ordinary division,
to give effect
to her claim to an undivided half share, a
section 7(8)(a)(i)
order
in her favour was necessary.)
[18]
Third,
in a marriage out of community of property where no question of a
division of a joint estate arises,
section 7(3)
of the
Divorce
Act
empowers
a court to redistribute assets ‘as may seem just’.
The parties might agree to a redistribution order. Again, if
the value of the assets of the spouse who has agreed to, or is
ordered to, transfer to the poorer spouse are of a value large enough
to meet that order without taking the pension fund interest into
account, no order in terms of
section 7(8)(a)(i)
is necessary, and
that spouse retains the whole of the pension interest.
[19]
Fourth,
where the assets of the spouse subject to an order in terms of
section 7(3)
whose assets are not valuable enough to give effect to
the order without talking the pension interest into account, and a
portion
of the pension fund interest has therefore to be appropriated
to give effect to that order, then an order in terms of
section
7(8)(a)(i)
is necessary. As in the third example, there has to be a
section 3
order in existence, anterior to the
section 7(8)(a)(i)
order becoming necessary.
[20]
Fifth,
in the case of a joint estate, if a forfeiture order in terms of
section 9
is appropriate, such order relates to the compulsory
sacrifice by one spouse of a part of that spouse’s half share
in the
whole estate. A forfeiture order does not relate, in
principle, to a portion of each individual asset, but to an overall
value,
even though for obvious practical reasons, the order per se
can, and often does, identify specific assets to be transferred to
make up the value of the portion to be forfeited. If sufficient
assets exist to facilitate the forfeiture calculation without taking
having to appropriate some or all of the pension fund interest no
section 7(8)(a)(i)
order is necessary.
[21]
Sixth,
in the case of a joint estate, if a forfeiture order is appropriate,
and to give effect to it, a part (or all) of a non-
member’s
half share in a member’s pension interest has to be
appropriated to bring about the specific division subject
to the
forfeiture order, then an order in terms of
section 7(8)(a)(i)
is
necessary. However, anterior to such a
section 7(8)(a)(i)
order there
has to be a forfeiture order in terms of
section 9.
[22]
Therefore
it was completely illogical, in this case, as the magistrate did, to
find that no forfeiture was appropriate and then
order the pension
fund to pay a sum to the non-member, the respondent. If no forfeiture
was appropriate, then the magistrate should
have made an order in
favour of the respondent directing the pension fund to pay to her a
half share of the appellant’s pension
interest.
[23]
The
magistrate referred to and relied upon the decision in
JW
v SW
2011 (1) SA 545
(GNP)
.
In that matter the court found that there was no grounds for a
forfeiture. Then that court considered making an order in terms
of
section 7(8)(a)(i).
Ostensibly the magistrate’s
notion of his powers derived from what was stated in that judgment at
paragraphs
[34] – [36]:
“
[34]
I turn now to consider the defendant's counter-claim in respect of
the plaintiff's pension interest.
Section 7(8)(a)
of the Act provides
that the pension interest of a party shall be deemed to be part of
her/his assets in the determination of the
patrimonial benefits to
which the parties to a divorce action may be entitled.
[35]
Section 7(8)(a)
of the Act
provides as follows:
'(8) Notwithstanding the
provisions of any other law or the rules of any pension fund —
(a) the court granting a decree
of divorce in respect of a member of such a fund, may make an
order that —
(i) any part of the pension
interest of that member which, by virtue of subsection (7), is
due or assigned to the other party
to the divorce action concerned,
shall be paid by that fund to that other party when any pension
benefits accrue in respect of
that member. . . .'
[36] It is clear from the
wording of the section that the court has a discretion in considering
an order in terms of ss(8)(a). Obviously
such a discretion must be
exercised judiciously, taking into consideration relevant factors.
Whereas, in considering forfeiture,
considerations of fairness should
not come into play (the court being confined to the three factors
mentioned in
s 9)
, such considerations would, in my view, apply in
considering an order under ss(8)(a).”
[24]
I
understand this dictum to mean that a discretion is conferred in
respect of
section 7(8)
(a) because the word ‘
may
’
is the operative verb in relation to the power to make an order. I
agree. This discretion will, necessarily, be exercised
to give effect
to the anterior orders about division of assets, as addressed above.
In that context it must be a narrow discretion;
withheld if the need
to give effect of the division of assets does not require it, but
logically, if the need to give effect to
the division ordered does
require it, the order cannot logically be refused.
[25]
The
notion that a substantive yardstick of ‘
fairness
’
is wholly absent from
section 9
is, in my view, overstated, given the
purpose of
section 9
, which, as I understand its import, enumerates
critical elements of what is the very stuff of fairness, in the
specific context
of a disintegrating marriage. Moreover, in
Wijker
v Wijker
(supra) at 727E-728B, it was held that the enquiry into
‘
undueness
’
was indeed a value judgment. A discretion, in the sense contemplated
in
Section 9
, judicially exercised, cannot be free of an equitable
core precisely because it is founded on a value judgment. A court
considering
an exercise of that discretion should, of course, do so
within the context of the objectives of the statute, and, more
narrowly,
within the context of the section. These objectives are the
equitable apportionment of assets between divorcing spouses. What is
rejected in
Wijker
v Wijker
at 731C-F is the notion that it is unfair that one spouse can benefit
from the efforts of the other and to right this inequity
a forfeiture
order must be considered; the court held that this outcome is
precisely what community of property contemplates, and
contributes
nothing to a
section 9
enquiry; the decision does not banish fairness
per
se
from the enquiry.
[26]
More
importantly, given the interpretation placed by me on
sections 7(7)
and
7
(8) above, if the judgment in
JW
v SW
intends to say that a distinct original power to redistribute the
assets of one party to another exists in terms of
section 7(8)
, I
must respectfully disagree. The only sources of a re-distributive
power vested in a court are those in
section 9
which provides for
forfeiture and those in in
section 7(3)
which provides for a
redistribution. (If a court simply orders an equal division, whether
in accordance with an agreement or in
the face of resistance, a
section 7(8)(a)(i)
order is only necessary in the circumstances
described above in the second example given.)
[27]
It
is therefore plain that as a result of the failure by the magistrate
to apply the provisions of the
Divorce Act properly
, because of a
misapprehension as to their meanings, the order in paragraph 3 of the
order of the Regional court, Johannesburg dated
31 March 2014 must be
set aside.
[28]
The
paradox of this result is that the appellant, through his efforts to
overturn an irregular
de
facto
partial forfeiture has succeeded in turning the clock back. The
question is again live as to whether a forfeiture order is
appropriate,
and only if so, is an order in terms of
section
7(8)(a)(i)
necessary to give effect to it. Moreover, if forfeiture is
not appropriate, the question arises whether the equal division
agreed
upon by the litigants requires the respondent’s as yet
undivided half share in the appellants’ pension interest to be
transferred to her, in which case a
section 7(8)(a)(i)
order in her
favour is necessary. The approach of the litigants to the mechanisms
by which their joint estate might be divided
was premised on an
incorrect understanding of the legal machinery. Their approach might
differ once they appreciate the correct
position.
[29]
The
appropriate way forward is that the matter be remitted, pursuant to
section 19(c)
of the
Superior Courts Act 10 of 2013
, for a fresh
enquiry and decision by the trial magistrate.
The Order
[30]
The
appeal succeeds.
[31]
The
whole of paragraph 3 of the order of the Regional court,
Johannesburg, dated 31 March 2014 is a nullity and is set aside.
[32]
The
case shall be remitted to the magistrate to enquire into:
32.1.
whether
an order against the respondent in terms of
section 9
of the
Divorce Act should
be made, and
32.2.
whether
an order in terms of
section 7(8)(a)(i)
of the
Divorce Act is
necessary to either give effect to the division of the joint estate
or to give effect to a forfeiture order, if any.
[33]
The
orders in paragraphs 1 and 2 of the order of the Regional court,
Johannesburg dated 31 March 2014, remain unaffected by this
order.
[34]
There
will be no order as to Costs.
SUTHERLAND J
I agree.
DEWRANCE AJ
Hearing: 14 October 2014
Judgment: 29 October 2014
For the Appellant: M D Hlatswayo, Attorney.
For the Respondent: Adv R Liphosa , instructed by Ramunasi
Attorneys, Ref: R Ramunasi